Introduction

Overview

Chapter 1: Introduction
Overview ..............................................................................................................................................................................................................1–1
Questions ......................................................................................................................................................................................................1–2
Planning Level...............................................................................................................................................................................................1–2
Finished Product Level..........................................................................................................................................................................1–2
Subassembly or Component Level........................................................................................................................................................1–2
Characteristics or Characteristics Value Level......................................................................................................................................1–3
Production Level............................................................................................................................................................................................1–3
Procuring Components..................................................................................................................................................................................1–3
Responsibility for Production.........................................................................................................................................................................1–3
Influence of Stock..........................................................................................................................................................................................1–3
Consumption Strategies and Logic...................................................................................................................................................................1–4
Purpose .........................................................................................................................................................................................................1–4
Prerequisites .................................................................................................................................................................................................1–4
Process Flow.........................................................................................................................................................................................1–4
Determining the Requirements Type ................................................................................................................................................................1–5
Activities ........................................................................................................................................................................................................1–5
Assigning a Planning Strategy via the MRP Group...............................................................................................................................1–5
Maintaining and Defining Strategies and Strategy Groups....................................................................................................................1–6
Table of Planning Strategy Assignments ......................................................................................................................................................1–7
Cross-Plant Planning........................................................................................................................................................................................1–10
Purpose .......................................................................................................................................................................................................1–10
Prerequisites ...............................................................................................................................................................................................1–10
Process Flow...............................................................................................................................................................................................1–10

Overview
The overall goal of production planning—and the use of planning strategies—is to better serve your
customers by reducing:
• Storage costs
• Replenishment lead times
To reach that goal you should group your materials according to their individual needs. You should create
as few groups as possible (for better transparency on the shop floor) and as many as necessary (for
flexibility). The following examples may provide the criteria to group:
• Cheap materials, which could be planned-consumption based.
It is more important to have these materials permanently available than to run out of them. The effort
to plan these materials should be minimal.
• Expensive materials, or those with long replenishment lead times, which need a more sophisticated
planning approach.
Consider the following questions when grouping the materials:

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Introduction
Overview

• Who is responsible for the production plan?

• Are the materials produced before or after the arrival of sales orders?
• How should the actual stock level affect production?
• Do you need a consumption of planned quantities? When should this consumption take place?
Consumption of planned production quantities (planned independent requirements) allows for a
permanent reevaluation of planned quantities based on actual sales orders.
• On what level in the product structure does your planning take place (finished product vs.
subassembly)
Production planning usually takes place only on one level of your product structure. For example, you
either perform production planning (“forecast” of demand) on the finished product level or on the
subassembly level.
Disclaimer
All scheduling information in the sample scenarios (stock/requirements lists), including the screens, is
subject to your scheduling settings. The actual results depend on your configuration and the setup of your
master data. The data is intended to give you typical examples.

Questions
To select the most appropriate planning strategies, answer the questions for each material group (remember
to use different strategies for different purposes). To make this guidebook easier to use, we have structured
similar strategy groups in such a way as to minimize the time you spend reading the entire document.

Planning Level
On which of the following levels do you want to plan component procurement:
• Finished product level
• Subassembly or component level
• Characteristics or characteristics value level

Finished Product Level

Finished product level planning is used when there is a stable and predictable demand pattern at the
finished product level (the material sold in sales orders).

Subassembly or Component Level

Planning on the component level is used when there is a stable and predictable demand pattern at
component or subassembly level (the material used in production orders).
For the following reasons, it is often more convenient to plan at the component, rather than on the finished
product, level:
• The demand pattern at finished product may be unstable
• Many similar variants of finished products require the same component or subassembly
• Finished products may be consumption based

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Overview

Characteristics or Characteristics Value Level

Planning on the characteristics (value) level is used when, for each configurable product, you have a stable
and predictable demand patterns at characteristics (value). The use of characteristics requires the use of the
variant configurator (see chapter 5, Characteristics Planning). Characteristics selection is translated into
component selection. Therefore, when planning at characteristics (value) level, you are planning, for
example, the characteristic “blue” paint. This characteristic results in the selection of the component “blue
paint.” A more complex example is to plan the characteristic “stick shift,” which results in the selection of
components related to that characteristic’s value.

Production Level
Would you like to produce the planned product in stock before a sales order is entered?
• If “Yes,” use a make-to-stock strategy (for example, 10, 11, 40).
• If “No,” use either a make-to-order or a strategy without final assembly (for example, 30, 52, 63, 20, 25,
26, 54, 55, 56, 65, 89)

Procuring Components
Would you like to procure the components before the entry of sales orders?
• To procure or produce the entire product (the part that you sell) in stock before sales orders can be
placed, you should use a make-to-stock planning strategy (40, 10, 11). The components are
automatically procured before the sales order entry.
• To procure or produce only subassemblies—essentially planning on a finished product level—you will
most likely use strategies without final assembly (for example, 50, 52, 55, 60, 63 or 65).
• To procure or produce subassemblies based on plans, which are independent of finished products, you
will most likely use strategies for the planning of components (70 or 59).

Responsibility for Production

Who is responsible for the production quantities?
If your production department is responsible for production quantities and the resulting stock levels (and
they do not want to rely on sales forecast for the finished products), you can use strategies for planning
components and de-couple the two departments.

Influence of Stock
Should the stock level influence the production quantities?
Strategy 11 allows for production that relies only on the planned quantities from Demand Management
(without netting stock quantities). This strategy is particularly useful if you want to have a determined
production plan (for example, if you have to deal with a seasonal demand pattern but want to have
constant production).

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Introduction
Consumption Strategies and Logic

Consumption Strategies and Logic

Purpose
In the consumption process, the system compares planned independent requirement quantities and dates
with actual customer requirements. The consumption process is defined for every planning strategy in
Customizing for Demand Management by combining a requirements type from Demand Management and
a requirements type from sales order management. This step means that the requirements type entered
when maintaining planned independent requirements is compared to the customer requirements type
specified in Customizing.

Prerequisites
You must maintain the consumption mode in the Material Master Record (MRP) screen or in Customizing
for Demand Management. The consumption mode determines whether consumption is to be carried out as
backward or forward consumption, or whether both consumption types are allowed. In backward
consumption, the system looks for the planned independent requirement quantity that exists directly
before the sales order.
In forward consumption, the system looks for the planned independent requirement quantity that exists
directly after the sales order. You also need to maintain the consumption period in the MRP screen or in
Customizing for Demand Management. The consumption period (forward or backward) is specified in
workdays and is valid from the current date. Sales orders, material reservations, and dependent
requirements then consume the planned independent requirement quantities that lie within the
consumption period and after (for forward consumption) or before (for backward consumption) the
requirements date.

Process Flow

Planned
indep.reqmts Backward consumption only

Time

Customer
reqmts Backward consumption period PB

Forward consumption only

Time

Forward consumption period PF

Backward/forward consumption

1 2

Time

PB PF

The customer requirement consumes the planned independent requirement quantity that either directly
precedes or follows it. If the planned independent requirement quantity directly preceding the customer

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 Introduction
Determining the Requirements Type

requirements does not cover the customer’s requirement, then the system looks for the next closest planned
independent requirements in the future or past.
During this process, the system refers to the consumption periods maintained in the material master or in
Customizing for Demand Management (see above). The consumption periods determine the intervals (for
backward or forward consumption) within which customer requirements consume planned independent
requirements. Customer requirements that lie outside the consumption period are not consumed.
If no consumption periods have been maintained, you can only consume requirements that are planned on
the same day. The allocation of customer requirements to planned independent requirements is carried out
dynamic. This step means that if sales orders or planning is rescheduled, the allocation is deleted and
redefined.

Determining the Requirements Type

A requirements type contains the control parameters to plan and consume planned independent
requirements and customer requirements. Different requirements types or combinations of requirements
types from planned independent requirements and customer requirements are defined for each planning
strategy.

You do not have to define any new strategies. SAP’s standard delivery provides you with all
strategies described in this document. There are only a few cases where you should define
your own planning strategies.

Activities
If you want the system to determine the requirements type when automatically creating the planned
independent requirements, enter strategy groups for the corresponding materials in the material master
record. If the strategy group allows a number of planning strategies, the system proposes the requirements
type from the main strategy. You can overwrite this strategy in the sales order using one of the alternative
requirements types in the Overview → Procurement screen.

Assigning a Planning Strategy via the MRP Group

You can also assign the planning strategy with the MRP group.
1. Assign the strategy group to the MRP group (in Customizing for Demand Management, choose Planned
Independent Requirements → Planning Strategy → Assign strategy group to MRP group). The MRP group is
assigned to the material in the material master record.
2. If you have entered a strategy group or an MRP group containing the appropriate strategies in the
material master record, you do not have to enter a requirements type in Demand Management.
The system determines the valid requirements type with the strategy group from the material master
record and automatically proposes this type when creating independent requirements (or customer
requirements). If the strategy group contains more than one planning strategy, the system proposes the
requirements type of the main strategy. If necessary, you can overwrite this proposal using one of the
requirements types from the alternative strategies.

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Introduction
Determining the Requirements Type

Maintaining and Defining Strategies and Strategy Groups

The planning strategies represent the business procedures to plan and produce a material. In the system,
the planning strategies are recorded in Customizing by a combination of requirements types from
Demands and Sales Order Management. This combination determines either the consumption of planned
independent requirements by customer requirements or how the availability check is to be carried out.
The planning strategies are maintained in Customizing for Demand Management. Here, the requirements
types are combined for the planning strategy. Technically speaking, the requirements types are texts that
represent the planning strategy in the application (Demand Management, Sales and Distribution). The
requirements type is controlled by another key—the requirements class. The requirements class contains
all the control parameters required for Demand Management and Sales and Distribution. To maintain the
planning strategy, you only have to combine the necessary requirements types. The corresponding
requirements class is automatically assigned with all the accompanying control parameters.
By assigning a planning strategy to a particular material, the system determines the correct requirements
type (and all the control parameters of the requirements class) when creating planned independent
requirements or sales orders. To set up this mechanism, certain objects and assignments must be set up in
the system. The standard system is set up so that you can perform all standard processes described in this
guidebook.
The primary object for setup is the planning strategy (in Customizing for Demand Management). This
strategy is defined by a requirements type from Demand Management, Sales Order Management or a
logical combination of both requirements types. These requirements types determine, for example, how the
consumption of planned independent requirements by customer requirements is carried out and whether
the availability check according to the ATP logic also occurs.
The following assignments have to exist to assign the requirements classes to planned independent
requirements and sales orders:
• Planning strategy to a strategy group (in Customizing for Demand Management) so that a material can
be planned with various planning strategies.
You can maintain one main strategy and up to six alternative strategies.
• Strategy group to the material (in the material master record), so that the system can automatically
determine the correct requirements type.
A planning strategy can also be assigned with the MRP group. Assign the strategy group in Customizing
for Demand Management to the MRP group. In this case, the MRP group is assigned to the material in the
material master record.

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Determining the Requirements Type

Determination of the Requirements Type

Material Master

MPR Group
1
2
Strategy Group

Strategy

Requirements Type

1 Highest Priority Requirements Class

2 Lower Priority

If you have entered a strategy group or an MRP group containing the appropriate strategies in the material
master record, you do not have to enter a requirements type in Demand Management. The system
determines the valid requirements type with the strategy group from the material master record and
proposes this type automatically when creating independent or customer requirements. If the strategy
group contains more than one planning strategy, the system proposes the requirements type of the main
strategy. If necessary, you can overwrite this proposal using one of the requirements types from the
alternative strategies.
The following strategy groups combine two planning strategies:
• Strategy 31
Allows you to select the Make-to-Order Production (20) or Production by Lot-size (30) strategies by
selecting the KE or KL requirements types [strategy 20 (KE) is the default]
• Strategy 32
Allows you to select the Production by Lot-size (30) or Make-to-Order Production (20) strategies by
selecting the KL or KE requirements types [strategy 30 (KL) is the default]
• Strategy 33
Allows you to select the Production by Lot-size (30) or Planning with Final Assembly (40) strategies by
selecting the KL or KSV requirements types [strategy 30 (KL) is the default]

Table of Planning Strategy Assignments

Strategy Requirements Type for Independent Requirements Type for Customer

Requirements Requirements
10 LSF Make-to-stock KSL Sale from stock without
production independent
(Chapter 2)
requirement reduction

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Introduction
Determining the Requirements Type

Strategy Requirements Type for Independent Requirements Type for Customer

Requirements Requirements
11 BSF Gross planned KSL Sale from stock without
independent independent
(Chapter 2)
requirements requirement reduction
20 KE Individual sales order
without consumption
(Chapter 4
25 KEK Make-to-order with
configurable material
(Chapter 5)
26 KEL Make-to-order for
material variants
(Chapter 5)
30 LSF Make-to-stock KL Sales order
production manufactured by lot
(Chapter 2)
size
40 VSF Planning with final KSV Sales order with
assembly consumption
(Chapter 2)
50 VSE Planning without final KEV Make-to-order with
assembly consumption
(Chapter 4)
52 VSE Planning without final KSVS Make-to-stock with
assembly consumption without
(Chapter 2)
final assembly
54 VSE Planning without final KEKT Make-to-order with
assembly consumption of variant
(Chapter 5)
55 VSE Planning without final KELV Make-to-order variant
assembly with consumption
(Chapter 5)
56 VSE Planning without final KEKS Make-to-order with
assembly consumption of
(Chapter 5)
characteristics planning
59 VSEB Planning; phantom
assemblies
(Chapter 3)
60 VSEV Planning the planning KEVV Individual customer
material with planning material
(Chapter 4)
consumption
63 VSEV Planning the planning KSVV Make-to-stock with
material consumption of
(Chapter 2)
planning material

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Determining the Requirements Type

Strategy Requirements Type for Independent Requirements Type for Customer

Requirements Requirements
65 VSEV Planning the planning ELVV Make-to-order variant
material with planning material
(Chapter 5)
70 VSFB Planning for
assemblies
(Chapter 3)
81 KMSE Assembly planned
order
(Chapter 6)
82 KMFA Assembly with
production order
(Chapter 6)
89 VSE Planning for KMSE Assembly planned
assemblies order
(Chapter 5)

The following planning strategies are used in the Project System (refer to the Project System
documentation for more details):
• Strategy 21
Similar to 20 with project settlement.
• Strategy 51
Similar to 50 with project settlement.
• Strategy 61
Similar to 60 with project settlement.
• Strategy 83
Assembly processing for PS.
• Strategy 85
Assembly processing for PS.
The following planning strategy is used in Service Management (refer to the Service Management
documentation for more details):
Strategy 84 Assembly processing for SM
The following planning strategy is used in PP-PI [(Production Planning for Process Industy) refer to the
PP-PI documentation for more details]:
Strategy 86 Assembly processing for PP-PI

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Introduction
Cross-Plant Planning

Cross-Plant Planning

Purpose
Demand Management can also be used to plan across plants. For each material, there is a planning plant
that procures and stores the materials independently of orders. There are also one or more ordering plants
where the materials are used for sales orders, production orders, or for other requirements.

Prerequisites
It is recommended that you first read Planning with Final Assembly (40) in chapter 2 to better understand the
following example.
Set up the material master as follows:
Planning Plant Ordering Plant
Any strategy group Special procurement type = 40
Mixed MRP indicator = 1

Process Flow
The following table illustrates a typical process flow:
Planning Plant Ordering Plant
Planned independent requirements are
created in Demand Management and trigger
procurement.
Procurement takes place before the sales
order arrives and materials are placed in
stock.
Any order (sales order, production order,
reservation) is created.
A stock transport order is created (for
example, by converting a transfer request that
was created by the MRP run).
Delivery for the stock transport order.
Goods receipt for the stock transport order.
Material is available for order.

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